Fed keeps interest rate unchanged

The US economy appears "stronger than previously predicted" according to the Washington Post and as a result, the Fed has not changed the base rate after several increases in previous quarters.The base reserve rate will remain at 5.25-5.5%, the highest in 22 years. Is a recession now looming? Some economists think so. Are Americans feeling great about the economy? No.“Concerns about inflation are still something that I hear when I talk to people,’’ Boston Fed President Susan Collins told The Washington Post last month. “From my perspective, what price stability means is a level of low, stable prices where people aren’t really focused on it. … And people are still quite focused on it.’’

Mortgage rates highest in 21 years

The average 30-year fixed mortgage is now at 7.09%, the highest since 2002. The NY Times reports that analysts predict that the rate will start to fall towards the end of 2023.The housing market in the US is now stagnant. Owners with low mortgage rates don't want to sell and many buyers don't want to lock in a rate that's double what it would have been a few years ago.Home sale volume is low across the country and that shortage of supply is keeping prices of existing homes high and rising.While existing home sales are falling, the sale of new construction is rising. However, most of those newly built homes are in the luxury range, which is most profitable for homebuilders.Read the full NYTimes report here:Interest Rates at 21 year high

Will the Fed Raise Interest Rates Yet Again?

The New York Times has admitted the US economy is in a recession and reporter Jeanna Smialek asks if the Fed will take steps to prevent what she calls a "slight recession" from turning into a big one.Inflation is high - as consumers well know - and the Fed has usually dealt with that by raising interest rates on loans, thus making it more expensive for already-stretched consumers to take out loans for houses, cars, or businesses. This results in less wage growth and increased unemployment and less consumer spending. Seems counterintuitive, right?The idea is that a slower economy will bring inflation under control (as shoppers stop shopping, sellers lower prices, so the idea goes). But the price increases we've been dealing with since 2021 are now driven by services - i.e. wages - and not by material goods. That's a lot harder to curb, as wage cuts are impossible to institute.Banks are failing, largely because they didn't have the capacity to deal with higher interest rates making their older holdings worth less. So will other banks fail if the Fed raises rates? And if so, what kind of chain reaction might that set off?See what the Fed decides this afternoon.